주식의 가치를 찾자: PER, The P/E ratio

Buying stock at a good value is like buying anything else at a good price. Your overall return from a growth stock can improve significantly if you pay a price that's currently under historic levels for that stock. 

It would be easy to think that the chief yardstick of a company's value is the price of its stock, but it's not. The price of the stock is more an indication of the public's current opinion of the company.  On any given day, investors vote on a company, or they give it a performance appraisal, in a very tangible way: with their money. if they have faith in the company, they buy, it they dont, they sell.

the chief yardstick of a company's value is its price/earnings ratir (P/E). This ratio represents the relationship between the price of the stock and tis earnings for the past year. to calculate it, you divide the current price by the earnings per share for that year. a $50 stock that earns $2 per shar has a P/E of 25 (50 divide by 2). The P/E is also clalled the "multiple". At a 25 P/E, a company is selling at a multiple of 25 times its earnings. 

When you look at stock listings (online or in the newspaper), you'll see a range of P/Es, some as low as 0.5 and others above 100. While there's no set rule on what's good P/E, generally speaking, a lower P/E is a good sign because it often means that the price hasn't risen to reflect the company's earnings ability, so the stock may be undervalued and portentially a good buy. A high P/E, on the other hand, could be the result of either a runaway price or depressed earnings. Both are red flags, and should prompt you to understand the reasons for them. A high P/E can, however, also be a good sign, an indication that the market feels the company has high growth potential. This is particularly true of new companies, which typically pass through a development stage characterized by a high P/E. The company may have no earnings for years, and yet its stock may move higher as investors anticipate earnings. Then the company may enter the aggressive-growth stage, marked by strong year-to-year earning gains. Earnings growth and P/E accelerate until the company exhausts its market or competition erodes market share.

Every successful company outlives its aggressive growth stage. The company's earnings may continue to rise, but its P/E will decline as the market reevaluates an acceptable price for the company's future profits. Earnings growth also slows as the company grows; it's hard for larger companies to repeat big percentage earnings increases. A financially strong, mature company may become a blue chip stock, but it will sell at a lower P/E than companies likely to show accelerated growth.

 

Look at the big picture: Growth at a reasonable price.

At the end of the day, a company's earnings growth and P/E are relative terms, and what matters most is finding the right combination of growth and value. The term GARP (growth at a reasonable price") refers to the philosophy that neither growth nor value alone is sufficient - and that the best stocks will have both reasonable valuations and strong prospects for growth. both an unproven high'flying growth stock and a low-priced laggard may seem attractive on one of these scales, but both also carry what I consider to be unacceptable risk.

 

 

Look at dividends

A divident is an individual's share of any profits that a company distributes to its shareholders. Companies typically declare and pay dividends quarterly. Always look at a stock in terms of its total return: both gorwth (price per share) and income(dividends). The dividend yield is the annual dividend divided by the current price.

Historically, high-growth companies have paid either very low dividends or no dividends at all, reinvesting most of their profits back into the company for growth. In face, in the past many investors shied away from dividend-paying stocks because dividends were taxed at the same rate as ordinary income. Now, however, that the tax rate on dividend income has been greatly reduced (see the sidebar on pages 99-100), dividends are no longer the exclusive domain of older, more established companies. In fact, it is my opinion that dividends are a great and income-oriented investors. Note, however, that tha current legislation is scheduled to expire after 2008. Unless the law is extended, dividends will again be taxed at ordinary-income tax rates beginning in 2009.

And as always, be sure to keep the big picture in mind. When a stock's dividend yield gets very highsay, above 4% or 5%(the broad market average is about 1.5%)- ask yourself why. perhaps the stock price is depressed (for a good reason), therefore giving the dividend yield a deceptive boost. In other words, you always have to evaluate companies not just on their ability to maintain and grow their dividend yield, but also on their overall health.